What is cost of equity after recapitalization

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Meyer & Co. expects its EBIT to be $66,000 every year forever. The firm can borrow at 6 percent. Meyer currently has no debt, and its cost of equity is 8 percent and the tax rate is 35 percent. Assume the company borrows $175,000 and uses the proceeds to repurchase shares. What is the cost of equity after recapitalization? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) What is the WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Reference no: EM131997796

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